The S&P 500 hit an all-time high in late October on its way to a positive month. The gains were driven by largely positive economic data, the Federal Reserve’s third interest rate cut this year and progress in geopolitical concerns. The first reading of GDP growth in the third quarter was a 1.9% annualized rate of growth, which is slightly below the second quarter’s 2.0% but above some economists’ estimates. A concerning metric out of this news was that growth in business investment slowed for the second quarter in a row, which raised worries that hiring may slow in the future. In a telegraphed move, the Federal Reserve cut interest rates but noted that further cuts are likely to be on hold as long as the economy expands moderately and the labor market remains strong. The Fed has been generally clear this year about setting expectations for upcoming moves, but it appears the next decision will likely be more dependent on changes in economic health in the coming months. The U.S. and China called for a “cease-fire” of tariffs last month in order to come back to the table and establish a phase one of a trade agreement. Despite this good news, there are still concerns about how long it will take to reach an official agreement and if the U.S. will be able to secure any measures that would improve domestic businesses’ positions.

 

European markets were helped along in October by some progress in Brexit negotiations and a shrinking likelihood of a “no-deal” British exit from the European Union. Generally, international markets were boosted by the U.S. – China trade news.